Philippine peso holds record low ahead of BSP rate decision

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Peso holds at record low ahead of BSP decision

Highlights

Philippine peso closes at a record low of P63.09 per dollar for the second consecutive day, with dollar turnover declining to $1.36 billion.
BusinessWorld poll shows 20 of 22 economists expect the BSP Monetary Board to raise rates by 25 basis points to 5.25% at Thursday's meeting.
Less hawkish signals from the U.S. Federal Reserve offer some support for the peso, as traders expect it to trade between P63 and P63.20 per dollar on Wednesday.

Market positioning before the BSP meeting

As reported by BusinessWorld, the peso is little changed against the U.S. dollar on Tuesday as market participants stay on the sidelines before the Bangko Sentral ng Pilipinas policy meeting on Thursday.

Data from the Bankers Association of the Philippines show the local currency closes at its record low of P63.09 per dollar for the second consecutive day. It opens slightly firmer at P63.03, trades as strong as P62.98 during the session and weakens to as low as P63.11. Dollar turnover falls to $1.36 billion from $1.778 billion in the previous session.

A trader says uncertainty over the possible outcome of the BSP meeting is keeping the peso steady, as the central bank's action could influence the local currency's direction. A BusinessWorld poll shows 20 of 22 economists expect the Monetary Board to raise rates by 25 basis points for a fourth straight time, bringing the policy rate to 5.25%.

If delivered, that move would match the benchmark rate set in June 2025 and mark the highest level in one-and-a-half years since the 5.5% seen in April 2025. The BSP has lifted benchmark borrowing costs by 75 basis points since April, and the trader says the peso may remain rangebound until the review concludes.

Fed outlook and near-term trading range

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort says less hawkish signals from the U.S. Federal Reserve also weigh on the dollar, offering some support to the peso even as domestic caution persists.

The Fed is scheduled to meet on Oct. 27-28 and is expected to leave rates unchanged at 3.75% to 4%. Reuters reports that fed funds futures traders are pricing in steady rates this month and a 91% chance of a hike in December, while recent comments from Fed officials, including Chairman Kevin Warsh, suggest policymakers are in no rush to tighten again.

For Wednesday, the trader expects the peso to move between P63 and P63.20 per dollar. Ricafort sees a slightly firmer range of P62.95 to P63.15.

In our earlier article on Philippine stocks and currency moves, we covered how the PSEi rebounded on bargain hunting even as the peso slid to a fresh record low near the P63-per-dollar level. We also noted that foreign buying returned after several sessions of outflows, while investors stayed cautious due to the ongoing pressure from a weaker currency and the broader interest-rate backdrop.

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